Toyota will miss sales target in Europe

A convergence of factors is pointing Toyota toward a year of reduced growth in Europe. Weak sales in Germany, few new models and the lack of an incentive program for fleet sales mean the company's growth for 2008 will likely miss its 5% target.

Refusal to fight a price war for fleet sales is one of the primary factors in the slowed growth, according to Toyota Motor Europe president Tadashi Arashima, speaking with Automotive News Europe. A big push to increase fleet sales by Toyota's competitors this year means it would have to cut prices further than it sees reasonable to achieve sales, and so fleet sales in Western Europe have fallen 3 to 4% through the first four months of 2008.

But Toyota's main focus is private sales, with only 35% of total European sales being fleet-derived. Private sales have done particularly poorly in Germany, where the company is down 21% through April, despite the German market as a whole climbing over 7%. Again the problem seems to be a reluctance to engage in a price war with the competition.

Refusal to lower prices means Toyota is experiencing slower sales. But lowering prices may not be possible - recent materials cost increases and resulting production cost rises have led to the company to announce price increases for the maker's U.S. market models. Similar cost concerns may be keeping the company from slashing prices in Europe.

Despite the downturn in growth for 2008, Arashima says 2009's outlook is not going to be affected. Total sales for 2008 are projected to reach 1.238 million, and the 2009 goal of 1.35 million will stand. The company thinks the impending introduction of the iQ city car in January of next year and the Urban Cruiser later in the first quarter will help boost sales, solving the maker's stagnant model line woes that are denting sales this year.